We’ve never had more choice at our fingertips when it comes to watching digital video. But while we spend hours binging popular shows, too often we also face low-quality, repetitive and poorly timed advertising.
In theory, CTV offers many advantages as an advertising platform, such as authenticated, addressable audiences and programmatic delivery. But watching US-based streaming and VOD services, it’s clear the majority of CTV advertising doesn’t live up to the hype.
Viewers might want to watch trashy shows from time to time, but they certainly don’t want to watch trashy ads. Too often they see the same creative over and over, without any contextual relationship to what they’re watching or any relevance to them personally.
For the solution to what ails CTV, the industry could turn to another rapidly growing marketing favorite: retail media.
Here’s how.
CTV advertising is broken
While spend on CTV advertising is growing, there is still significant room for improvement. US advertisers will spend just $25 billion on CTV over the course of 2023, compared to $86 billion on TV overall.
Advertisers’ reluctance to commit more spend to this channel is, to some degree, understandable. There’s a huge volume of potential inventory partners in the CTV ecosystem, with more than 1,400 FAST channels, meaning there will be low-quality content to navigate around.
From an audience perspective, repetitive ads are annoying. Unskippable ads – popular with publishers that want to get around ad blockers – can exacerbate frequency issues and further irritate viewers. Meanwhile, the interruptive nature of ad breaks on some platforms also causes problems.
Retail media adds value to CTV inventory
CTV and retail media could be a perfect match to fix these issues while giving marketers a unique opportunity to connect with their audience. In the past, advertisers allocating budgets through retail media partners tended to focus on on-site search. However, there’s a growing interest in allocating CTV ad spend through retail media networks (RMNs), even if this currently equates to a small percentage of media buying strategies.
The partnership between Roku and Walmart shows the two markets are already intertwining. Such collaborations are built on connecting RMN retail segments – buyer preferences, transaction details and the like – to CTV viewership data. Brands and agencies can buy CTV inventory enriched by RMN data off the shelf, or they can bring their own first-party data to further refine the target segments. Usually, this all happens under the management of the CTV provider.
RMNs don’t tend to sell CTV inventory. They focus on selling owned and operated inventory across their mobile, online and in-store placements, while potentially directing a portion of this spend over to CTV platform partners.
One benefit for brands working with an RMN – rather than going straight to the CTV platform – is they can define the retail-specific audience they want to target, with the RMN working across its publisher and CTV partners to find inventory to fill demand outside of its own media properties.
This approach also gives brand marketers a unique opportunity to access comprehensive measurement data.The RMN can use its relationship with the CTV platform to provide metrics on campaign performance against retail-specific audience segments across the RMN’s owned and operated inventory, as well as affiliate inventory from its CTV partner.
Retail media can help CTV fix ad-quality issues
Advertisers want more advanced targeting options and reliable measurement, and that’s exactly what retail media in combination with CTV can give them. And if advertisers allocate more budget to CTV through retail media partners, the quality of the ads themselves will improve. They will be better targeted with viewership data, enriched by RMN data and the brand’s own first-party customer data.
Better measurement of campaigns means marketers can tweak creatives to optimize performance, making ads more likely to lead to the brand’s desired outcomes. And shoppable ads, such as those enabled by the Roku-Walmart partnership, go well beyond the kind of advertising experiences possible on linear TV.
A vision of the future
It’s likely that CTV and RMN collaborations will increase as advertisers, retailers and publishers adapt to a first-party world. Media companies should be looking to RMNs to help them create ad platforms that match the quality of content they are producing, enhancing the viewer experience, not irritating users.
If CTV platforms can deliver an end-to-end audience-driven media solution, they can work with retailers and brands that best fit their viewer profile, maximizing the value they can derive from these collaborations.
By following this path, CTV advertising can start to live up to the hype.
“On TV & Video” is a column exploring opportunities and challenges in advanced TV and video.
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